QLS has taken the position that the provision of seller disclosure documents and the subsequent sale of the property are separate legal matters.
Further, the legislation states that for each client and each client matter a separate trust account ledger should be maintained. (s42(1) Legal Profession Regulation 2017)
In distinguishing between legal matters, the following characteristics were considered.
The different legal issues involved
- The core legal issue in the provision of seller disclosure documents is a matter of compliance with the new legislative requirements. It may also be the provision of legal advice as to the content of the statement or disclosure requirements.
- The core legal issue in the settlement of a conveyance matter is the facilitation of the transfer of property from one party to another.
Parties involved
- The parties involved in the provision of seller disclosure documents are the law practice and the client (seller).
- The parties involved in the settlement of a conveyance matter is the law practice, seller (potentially the client), purchaser (potentially the client), mortgagee (possibly), mortgagor (possibly).
Procedural requirements
Advertisement
- There are different and totally separate procedural requirements for the provision of the seller disclosure documents as opposed to the settlement of a conveyance matter. The mandated use of an electronic lodgement network (Pexa) to complete the conveyance is one procedural difference.
A defined beginning, end, and a clear outcome
- Provision of seller disclosure begins with a request from the seller client and ends once the documents have been provided to the client. The clear outcome is that of compliance.
- o Settlement of a conveyance starts when the seller client requests the law practice to either prepare a draft contract of sale, or act upon a completed contract of sale. The matter ends once settlement has been reached and the property transferred. The clear outcome is the transfer of title from the seller to the buyer.
Capable of being separately costed
- The work involved in the provision of seller disclosure is clear and can be separated and costed separately from the work involved in a conveyance matter.
Coexistence
- Provision of seller disclosure must occur before a contract may be executed. Therefore, the sale matter does not exist at this point, and cannot exist. The inference cannot be drawn that they are the same matter, when in fact one of the parts of the purported matter does not exist.
- o The sale of the property for which seller disclosure documents have been provided may never eventuate or potentially can be completed by a different law practice, confirming that the two legal matters are in fact capable of being separate matters and do not rely on the same party performing both together.
Legal work
- The provision of seller disclosure documents may be completed by the seller themselves or by the seller’s real estate agent (provided they do not provide any legal advice on its contents) and need not be prepared by a lawyer unless legal advice is required to respond to an aspect of the seller disclosure documents.
- Conveyancing in Queensland is legal work and must be completed by a lawyer.
2 Responses
Does this mean that law practices must open separate files for seller disclosure and the conveyance? It seems to. If so, how does that reconcile with the stated view of society representatives at the seller disclosure training sessions (with which I agree) that the draft contract should be prepared at the same time as the seller disclosure statement? In that case, the two “beginnings” described above will be simultaneous. If firms charge a single fee for preparing both documents, this will be awkward to reconcile across two files. This will also substantially duplicate administration for what the society views as two matters which are, in most cases extremely closely (almost inseparably) related.
I find it hard to understand the reasoning behind this and believe this will cause even more frustration around the additional administrative steps that need to be taken in this area. Whilst its easy enough to say the extra costs can be passed onto clients, the clients will not understand why we are opening two separate files for what they will consider to be the one matter. They are already disgruntled with the extra fees and delays with preparing the disclosure statements. They will not want to be paying more for us sending them two cyber alerts, two retainer letters, two file closing letters etc. The properties cannot generally be sold without the disclosure statement. I can’t understand how it is not treated as a core part of the conveyance. I do not believe anybody would have been opening separate files for body corporate disclosure statements when a unit was being sold. Why is this different? We are doing our level best to comply with the ever increasing standards we are expected to meet but the people making these decisions need to consider how extremely hard it is these days trying to get sufficient qualified staff to work in private practice – even for the most basic areas of law. This unnecessary additional red tape just makes it even harder without any improvement in legal standards or quality of work for the client.